Press releases

Impact Of Climate Change To Cost The World USD 300 Billion A Year

NAIROBI, 3 February 2001 - Global warming may cost the world several billion dollars a year unless urgent efforts are made to curb emissions of carbon dioxide and the other gases linked with the "greenhouse effect".

A report by insurers, members of the United Nations Environment Programme's (UNEP) financial services initiative, indicates that losses due to more frequent tropical cyclones, loss of land as a result of rising sea levels and damage to fishing stocks, agriculture and water supplies, could annually cost around $US 304.2 billion.

In some low lying states such as the Maldives, the Marshall Islands and the Federated States of Micronesia the losses linked with climate change could, by 2050, exceed 10 per cent of their national wealth or Gross Domestic Product (GDP).

The report comes days before the twenty first session of UNEP's Governing Council which runs from 5 to 9 February. Around 100 environment ministers will be gathering in Nairobi, Kenya. How to cope with the rising toll of natural disasters will be high on the agenda.

Klaus Toepfer, Executive Director of UNEP, said: "The time to act is now. We must all work to reduce emissions of greenhouse gases. But mitigation is not enough. The world has already signed up to a certain level of human-induced, climate change, as a result of over a century of industrial emissions primarily from the developed world". " We must help vulnerable areas of the world, primarily in the developing countries, to adapt to the consequences of global warming. We have a moral responsibility to our fellow men and women to protect them and their families from food shortages to devastating floods," he said.

Mr Toepfer said the latest Intergovernmental Panel on Climate Change (IPCC) report, jointly sponsored by UNEP and the World Meteorological Organization, had underscored the need for swift action. The panel, made up of thousands of scientists from around the world, believes that average temperatures across the world could climb by between 1.4 and 5.8 degrees Centigrade over the coming century. "The scientific consensus presented in this comprehensive report about human-induced climate change should sound alarm bells in every national capital and in every local community. We must move ahead boldly with clean energy technologies, and we should start preparing ourselves now for the rising sea levels, changing rain patterns, and other impacts of global warming," said Mr Toepfer. "These estimates from insurers of the costs of climate change to the world's economy serve to further underline the need for governments to act to avert the damaging impacts of rising greenhouse gas levels in the atmosphere," he said.

Mr Toepfer said it was also crucial for countries to re-start the climate change talks which were stalled in The Hague at the end of 2000 so that nations can take the first steps to deliver meaningful emission reductions. The estimates, published in UNEP's Our Planet magazine, come in an article from Munich Re, one of the world's biggest re-insurance companies which has been monitoring the cost of natural disasters since the 1960s. They assume that carbon dioxide concentrations will rise to twice pre-industrial levels in 2050.

Concentrations of carbon dioxide were, prior to the industrial revolution, about 275 parts per million and are currently at 360 parts per million mainly as a result of the burning of fossil fuels in factories, offices, homes and in cars and other vehicles.

Dr Gerhard Berz, head of Munich Re's Geoscience Research group, tells UNEP's Our Planet, that "there is reason to fear that climatic change will lead to natural catastrophes of hitherto unknown force and frequency". "Studies have indicated, disturbingly, that climatic changes could trigger world wide losses totalling many hundreds of billions of dollars per year," he says. "Most countries can expect their losses to range from a few tenths of a per cent to a few per cent of their gross domestic product each year. And certain countries, especially small island states, could face losses far exceeding 10 per cent," he says.

Dr Berz concedes that the calculations need refining "but when that point is reached, they might convince even those governments and businesses still hostile to international action to combat global warming". The costings (see table) have looked at the losses and gains for the European Union countries; the United States; the nations of the former Soviet Union; China; the OECD and the world.

Globally some of the biggest losses will be in the area of energy. The water industry world-wide will be facing $47 billion of extra costs annually by 2050. Flood defence schemes to protect homes, factories and power stations from rising sea levels and storm surges may cost on average one billion dollars per year. It is estimated that in low lying countries like the Deltas of Bangladesh and small island States the cost could be significantly higher.

The article predicts that eco-system losses, including mangrove swamps, coral reefs and coastal lagoons, could run at over $70 billion by 2050. Such areas are vital nurseries for fish, upon which many poor communities rely for protein, as well as being homes to precious marine life. Agriculture and forestry could lose up to $42 billion world-wide if carbon dioxide levels reach twice their pre-industrial concentrations as a result of droughts, floods and fires.

Natural disasters, including more frequent cyclones and hurricanes, could add a further three billion dollars to the globe's climate-related bill. There are also expected to be losses and additional costs in the construction, transport and tourism industries but these have so far not been quantified. The article breaks down the possible costs for different parts of the world.

Europe's biggest climate related losses will be in respect to higher levels of mortality and health costs. These may, annually, be running at $21.9 billion. Water management may be costing an extra $14 billion in the EU by the same date. In the United States the extra costs of health related measures and more intensive water management may reach nearly $30 billion a year by 2050. Among the former Soviet bloc countries the biggest climate-related costs, estimated at some $6 billion a year, are likely to accrue from losses in agricultural production. China's biggest losses, some $7.8 billion, are also likely to be agricultural.

Dr Berz says it is vital for the insurance industry to adapt to these future risks by providing long term cover for natural hazards and by promoting action among nations to reduce the build up of greenhouse gases. UNEP scientists are developing an early warning system to try and reduce the misery and loss of life as a result of climate related natural disasters. It hinges on pinpointing areas where deforestation, destruction of reefs and other environmentally damaging actions are making communities more vulnerable to natural catastrophes including floods, forest fires, mud slides and earthquakes. They have begun drawing up maps of the globe showing where people are vulnerable to such catastrophes. The first maps have now been completed for Central America where a recent earthquake hit El Salvador.

Daniel Claasen, a member of the UNEP team, said that it was hoped to devise a "vulnerability index" to give governments and local and regional authorities a measure of how disaster-prone areas are. "A place ranking high on the index might be a mountainside or hilly area where there has been a high rate of deforestation making the soil prone to erosion. Such a site might be especially vulnerable to mudslides and land slips as a result of the kinds of torrential rains triggered by an El Nino," he said.

El Nino is a natural climatic phenomenon in the Pacific Ocean that can wreak havoc on the world's weather systems causing droughts, forest fires and floods across much of the world. " Other areas might be coastal zones where the clearing of mangrove swamps and the destruction of reefs have made people living there at greater risk from floods and storm surges," said Mr Claasen.

UNEP will be working closely with sister United Nations organizations such as the World Meteorological Organization, with its expertise in climate forecasting, and the Food and Agricultural Organization of the United Nations which is involved with the way land is used for food production in creating the early warning system. Meanwhile the United Nations Centre for Human Settlements (Habitat) has expertise in planning cities that are safer and less vulnerable to catastrophes.

"What is needed is close cooperation with other UN organizations, governments, scientists and regional and local authorities to make sure we can identify areas at risk and warn people of the possible dangers," he said. UNEP stresses that an early warning system and vulnerability index may take several years to develop. " But we do not have to wait. Action can be taken now to make sure that the buildings are built to better withstand disasters," he said.

Building codes, which are properly enforced, are also vital. In the recent earthquake in India it was reported that many people were killed not by the tremor but by falling buildings. The buildings had been built to strict construction codes but these codes had been poorly supervised. Munich Re argues that the rise of the so-called mega city with its development of high rise buildings and shanty towns on the outskirts is adding to the risk from natural and climate related disasters.

Studies show that such cities, which have more than 10 million people, appear to develop their own weather patterns accompanied by more thunderstorms, torrential rain and hailstorms. These can rip roofs and the façades of buildings off which can smash into roads and houses below. In 1950 only one city, New York, had more than 10 million people. Today there are 20 of which 16 are in the developing world including Bombay, Mexico City, Shanghai and Sao Paulo.

"With careful planning and respect for the environment we can do much to protect the world's citizens. A modest but sustained investment by governments in disaster mitigation and emergency responses can save lives and avoid tragedies," said Mr Toepfer.

Notes to Editors:

The Global Information Systems on Natural Hazards (GISNH) including a web site of Maps on Natural Hazards Data and Links to Relevant Databases can be found athttp:// www.grid.unep.ch/gis

The 2000 winter floods in Britain and those on the Rhine in 1993 and 1995. The January 2000 hailstorms in Australia; Hurricane Mitch in 1998; the land slides as a result of the January earthquake in El Salvador; the 1997 forest fires in Indonesia; the forest fires in the Western United States in the summer of 2000; recent dust bowls in Mali and Burkina Faso due to desertification; the drought in Kenya in 2000.

Floods: In 1998 the Yangtze River in China burst its banks causing the worst floods in 50 years. It was caused partly by the loss of up to 80 per cent of trees in the river basin. Two million people in Bangladesh had their homes flooded in 1999 as a result of deforestation in the Himalayas.

Forest fires: The health of 70 million may have been affected by the forest fires in Indonesia in 1997 which cast a pall of smoke over six South East Asian countries. Three million hectares of Brazil's forests in Roraima burnt in the same year. A similar area of forest was alight in Mongolia in 1996. Experts blame the fires on drought, deforestation and land clearance.

Earthquakes: Around 80 per cent of deaths from earthquakes are caused by collapsing buildings. Most of the 100,000 who died in the 1988 Armenian quake lived in cheap, concrete, buildings.

Deforestation: Forest clearance adds to droughts and desertification. Ethiopia's highlands, which have supported agriculture for millennia, have lost 90 per cent of their trees since 1990 making it hard to grow crops. An estimated 135 million people are in danger of becoming environmental refugees in Mali and Burkina Faso.

Desertification as a result of deforestation and land clearance has forced an estimated one in six to leave the land.